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Supplements » ETF Report March 2021

ETFs: Against a complicated backdrop


Will_RhindGROWTH IN THE LEVERAGE AND INVERSE ETP MARKET

Will Rhind, Founder and CEO, GraniteShares

Market volatility and a surge in people trading stocks has fuelled growth in the leverage and inverse ETP market.

This new category of products, which are aimed at sophisticated traders, magnify the moves of an underlying index or stock.

Recently, we have seen huge daily movements in markets – for example, on March 12 last year, the FTSE 100 fell by 10.87%, and on March 24, it increased by 9.05% – its biggest fall and rise of the year. Since then, we have seen a strong rally in many key indices and stocks around the world.

This, coupled with a rise in people trading more during the coronavirus crisis, has resulted in a dramatic increase in traders and investors using leveraged and inverse ETPs.

There is a growing band of investors seeking to profit from market volatility, and this is only set to increase.


Alex_StoyanovTHE POTENTIAL OF BLOCKCHAIN

Alexander Stoyanov, Chief executive officer, Global Palladium Fund

Blockchain has the potential to transform fund management and is likely to become a feature of the industry landscape relatively quickly. Our research among institutional investors and wealth managers affirms this, with 50% predicting there will be a ‘dramatic’ increase in the use of blockchain technology over the next three years.

By using DLT, all information is shared among participants, reducing the costs of the reconciliation of data, and the use of ‘smart’ contracts eliminates counterparty risk by reducing the number of intermediaries involved. Information recorded on the blockchain is immutable and additional information can be added to improve transparency and regulatory reporting. Furthermore, the digitalisation of commodities means the source of underlying metals can be traced and the way they were produced captured, along with their ESG credentials.

This technology’s applications in boosting transparency, efficiency and security in markets is becoming ever more apparent. By challenging existing banking industry infrastructures, roles and functions of financial intermediaries, settlement times, transaction risk and costs will come down. A win/win for investors and providers alike.


Rahul_BashanGREEN SHOOTS

Rahul Bhushan, Co-founder, Rize ETF

Medical cannabis is in the early stages of a multi-year efficacy-led bull market that will buoy companies across the medical and recreational spectrum. The collective perception is already shifting away from cannabis as a discretionary vice to a plant with numerous use cases.

The recent acquisition of GW Pharmaceuticals, a UK-based pharmaceutical cannabis company, by Jazz Pharmaceuticals is a case in point. GW’s CBD-derived medicine, Epidiolex, has been hugely successful since its approval by the FDA in June 2018, and helped push boundaries in our understanding of neuroscience. Several companies have followed in GW’s footsteps looking for new medical use cases for cannabinoids. And not many people know this but ‘Big Pharma’ is already involved in the medical cannabis space, notably AbbVie and Novartis.

We see cannabis disrupting several categories. Specifically, biotechnology/pharma, wellness and industrial goods.

On a macro level, we have over 70 countries around the world with some form of legalised medical cannabis programme. In the US, medical cannabis is legal in 35 states. And with a new administration that supports reform, the tailwinds for the sector look incredibly positive for the sector.

© 2021 funds europe